Intro to Amazon FBA: Fulfilment by Amazon

Sometimes I tell some people that I sell through Amazon, and they are confused. Like proper confused.

“But I thought they were just Amazon? And they sell the things?”

Amazon isn't just an online store. As well as the products that Amazon sells themselves, it has a thriving marketplace that keeps the business flowing, filling in gaps where Amazon hasn't got the stock to meet demand.

Amazon FBA – Fulfilment by Amazon – is growing massively in the UK, just like it has in America in the past few years. It's a scheme that takes things a step further for these Marketplace sellers. Not only do you get to sell via Amazon.co.uk, but you also get to take advantage of their world-class storage and logistical infrastructure.

How Does Amazon FBA Work?

Take a product you want to sell on Amazon.

List it

Label it

Send it to an Amazon fulfilment centre, where it is stored

Amazon lists it on their site

Item sells

Amazon pick, pack and ship it on your behalf

On to the next one

It's a very clean process, and doesn't take long to get the hang of. Once you have a product you want to sell, you list it via Amazon. If it's already stocked on there, it's very simple. If it isn't, I’ll assume it’s because you’re doing private label. In that case, you will need to photograph it and include various product details.

Afterwards, you box it, label the products with barcodes and get UPS to collect the box from you (or drop it off at one of their Access Points). All of your work is then done. Once someone purchases it, Amazon package it up in their own boxes, and dispatch it with next-day delivery.

The only other things to do are to remain vigilant to see if your prices are competitive, and adjust accordingly. You can always use repricers to handle that for you.

What Do People Sell Through Amazon FBA?

There are a handful of different ways that people tend to use Amazon FBA. Each could do with their own guide, as each very different from the others.

Online / retail arbitrage. Buying products cheaply from other retailers and selling them for a higher price on the most popular online retailer.

Ecommerce expansion. Selling self-manufactured products – which may be sold through their own website or elsewhere – on Amazon.

Selling used goods. As an alternative to eBay for products already listed on the Amazon database.

The Best Sellers Rank indicates how well a product sells within its Amazon category. Ideally, you want to sell items that sell quickly, so fall in the top 1-5%. Click here for my guide for the most up-to-date statistics.

What's in It for You?

Amazon's Marketplace is where more advanced eBay sellers tend to move on to. FBA takes things up a step by removing all of the pain points that come with eBay selling.

By sending things to Amazon fulfilment centres, it means you no longer have to store inventory. The big AMZ do that for you. You also don't have to be on-call to send out deliveries quickly after a sale. They are on it. All of those questions you get from prospective buyers are gone. Any returns are handled by the big guy. Once you send your products in, you don't have to do anything else.

As well as all that, a major advantage is that all FBA sales are Prime eligible. In the UK, this means next day or nominated day delivery on your purchase. This means that you can price products higher than on eBay, as buyers will value that added convenience.

Amazon is the UK's most popular online store. Their site's traffic is usually double that of eBay's. If someone wants to buy a product online, the chances are that they'll hunt for it on Amazon, and they might not even compare prices elsewhere. Big old advantage right there.
Coupled with this, Amazon actually tells you how each product ranks in terms of comparative sales in its category, giving you an indication of how likely it is to sell. It makes it far easier for you as a seller to be confident that any well-priced listing is likely to result in a purchase.

While we're still in the early days of FBA, the customer may know no different between an Amazon listing and one from an FBA seller. Especially with new products. If they were going to buy the item from Amazon anyway, it makes no difference that a member of the public sourced it, rather than Amazon themselves.

What's in It for Them?

Fees. Oh, you thought you could do all of this for cheap, yeah? Amazon tell you upfront, per item, how much each sale will cost you in commission. It changes over time, but it could between 20% and 40%.

Amazon is eating nicely off that 20%-40% from each FBA sale, and it's why it's in their interest for more people to become sellers on their platform. Each month, it costs a £30 to have a professional seller account. More money.

With Amazon FBA, you effectively become part of Amazon's buying and merchandising team. You find products that you believe will sell on their site and send it to them. That's less work for them. It also means that they don't have to go to the effort of buying more in-demand products, because the Marketplace sellers create the illusion that Amazon always sell the items themselves. As the items still go through their quality checks, they ensure that we deliver on our side of the agreement too.
Amazon can buy in quantities that no FBA seller can compete with. Sellers using their platform to sell new goods are proving to Amazon how lucrative it could be to restock items, sell them at higher prices and run more effective promotions.

What Do I Need to Get Started?

It depends. Here's everything I use. A lot of it will come back to the various strains of FBA being quite different, requiring different knowledge, skill and capital to invest. Private labelling is going to require a whole heap of specialised things that I wouldn't be able to offer advice for. However, all of the following will be absolutely essential for whatever you intend to do with Amazon FBA:

Suffocation warning stickers. It's a requirement for any polybagged items. Just do it.

That covers off the absolute basics for an efficient starter Amazon FBA business. For private label and existing own-brand ecommerce sellers, there's more to consider. Let’s not go there right now.

What's My Experience with Amazon FBA?

eBay used to be the only place for me. Once I had it sussed, I had my operation running like clockwork. However, taking photos, going to the Hermes ParcelShop, packing, answering questions, meeting people for item collections, dealing with returns takes times. All but a fraction of the packing disappears with Amazon FBA.

The fees are huge compared to eBay, but you get so much more. The simple fact that their site is more popular means, for your average product with equal competition, you're going to sell quicker on Amazon. Everyone loves cash flow. My first shipment, containing 12 units of all sorts of new pickups, sold in the first week. From that point, I wasn’t going anywhere.

To Marketplace sellers, there's not much difference in terms of the SellerCentral interface. You're still dealing with something quite clunky and old-fashioned, but it's practical, and you will get your head around it soon enough.

One thing that might bite you is that Amazon buyers, more than I find with eBay, are trigger happy with returns. Buyer's remorse plays a part, as things like media (DVDs and games) can be opened, played for a couple of days and returned after use. All the buyer needs to say is that they found it cheaper elsewhere and get reimbursed for their order. It's annoying and not something eBay users will be as accustomed to, but it's worth mentioning.

It depends very much what you use FBA for, in terms of the results you can expect. For private label and expanding an existing ecommerce business, you better hope your product is good first. I haven't used FBA for this yet, but as long as you sell a unique, well-marketed item with demand, the purchases and reviews should get the ball rolling for a successful product like.

For online and retail arbitrage sellers, there isn't a better platform. There are instances when I favour eBay for this, but Amazon FBA leads to such a quick turnaround of well-sourced and priced stock. Because it this, it makes sense why so many to rely solely upon it for their online income.

Once you overcome your first shipment, it's a very straight-forward process. It's full of potential right now and more and more seem to be taking advantage. As long as you buy within your means, there's no reason why online arbitrage or second hand selling on Amazon should require much initial investment. £200 is probably enough to get started and do well, as long as you source cheaply.